Minyanville's Market Recap: Fed Cuts 50, Markets Surge!
Lehman reported better than expected. FOMC cut by 50 basis points. Markets Surge!
In the biggest news of the day, the FOMC surprised investors with a larger-than-expected rate cut slashing the overnight fed funds rate as well as the discount rate by 50 basis points to 4.75% and 5.25% respectively. The news sparked a broad-based rally sending stock prices surging for one of the best gains of the year. Financial stocks were noteworthy. Lehman Brothers (LEH) which reported 3Q earnings, gained 10%, Goldman Sachs (GS) broke the 200 level for the first time since mid-summer gaining +6.8%, and Morgan Stanley (MS) gained +5.5%. Please click here for Professor Shedlock's analysis on the fed's move in Righting The Economic Ship?
As previously noted, Lehman Brothers reported 3Q earnings. The results came in better-than-expected at $1.54 EPS vs. $1.47 cons. Revenues fell 22.0% year-over-year to $4.3 bln as expected. The news gave a slight boost to the stock but the buyers didn't show any real conviction until the FOMC announcement. Professors at the 'Ville were hesitant to call Lehman's figures sound numbers. Read Professor Depew's Five Things You Need To Know for his thoughts on Lehman's quarter. In addition Mr. Practical chimed in with Bringing Lehman's Fuzzy 3Q Into Focus.
The housing sector also rallied. Notable stocks include Hovnanian (HOV) adding +28%, Ryland Group (RYL) adding +8.49%, and Toll Brothers (TOL) adding +8.49%. Dr. J noted on the Buzz unusual call buying activity in Hovnanian yesterday. Today he added "it was what [Ara Hovnanian] said after the FOMC announced cuts… that put this stock on the launching pad.
In other news, Gold futures hit a 28 year high as reported by Bloomberg. Our gold specialist, Professor Lewis added, "Like the old saying goes, don't fight the Fed. So what do we do… we bet on more inflation. We buy Gold." For more of what happened on the Buzz, please click on our Buzz Bits for more in-depth summaries.
Below is a recap of the idea flow on today's Buzz & Banter. Please note that stocks may appear on both bullish and bearish categories due to long and short term trades by our many Minyanville professors.
Some bullish trade or investment ideas: ASTI, SCHW, LULU, GS, VOL, NVT, BX, FIG, HOT, UA, NILE
Some bearish trade or investment ideas: CROX, GRMN, GVA, AMG
Here's a preview of what's to come for Wednesday's trading session. Click here for the full trading radar.
Wednesday, September 19
8:30 CPI: 0.0% cons
8:30 Core CPI: 0.2% cons
8:30 Housing Starts: 1360 k cons
8:30 Building Permits: 1350 k cons
10:30 Crude Inventories: -7011 k
Before: AIR, KMX, DBRN, GIS, MS, POSS, SMTS
After: APOG, CKR, CLC, CMTL, MLHR
Hope ya'll had a great day, Minyans! Rest up because tomorrow is Hoofy And Boo Wednesday. Have a goodnight!
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